Miami Real Estate: How Foreign Buyers And The Rental Markets Are Keeping The Local Housing Sector Afloat

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Long viewed as the financial and transportation gateway between the US and Latin America, the city of Miami has long attracted a significant number of international investments.

However, in recent years, more investors awash with cash from economic growth in Latin America have arrived to invest in the city’s soaring property values. The South Florida region has long been considered as the destination of choice for Europeans, and many investment portfolio managers from overseas have also viewed the city’ beachfront property as a bargain even at current prices, in comparison to soaring property values in Europe, and the advent of a strong euro against a weak dollar.

Foreign Investment Eats Up A Large Share Of Real Estate Purchases Here

Based on data provided by the National Association of Realtors, foreign buyers and investors now accounts for around 15 percent of all home sales in Florida, and the number is estimated to be much higher in Miami. Much of this foreign investment goes into mixed-use developments that combine high-rise residential condo units mixed with commercial spaces for offices, retail outlets, and hotels.

Although these days, some state-based financial institutions have temporarily halted financing of new condominium projects here, larger national and international banks remained to be active lenders in the south Florida housing market, but have lowered their exposures because of the damages brought about by the current housing crunch.

The Steady Influx Of New Residents Keeps The Housing Market Afloat

Despite the pressures brought about by rising foreclosures and plummeting home prices, and concerns about overbuilding, many s note that Miami's previous construction boom has occurred during a time when the economic and demographic conditions throughout Florida have been generally favorable to housing.

Growth in per capita incomes in this state continues to keep pace with that in the United States as a whole over the last decade, while the rate of population growth has consistently been about a percentage point ahead of the overall U.S. rate. The continuing influx of new residents will continue to put pressure on a limited supply of land, especially in desirable locations, and has further pushed up housing prices.

How Investors Are Joining The Rental Market To Make Profits These Days

According to housing analysts, the greatest competition for home rentals will come from the bulk of unsold single-family homes and condo units, located in foreclosure epicenters such as South Florida, Phoenix and Las Vegas, and it is expected that landlords will control the prices in those areas. According to a study by Real Capital Analytics, around 331,000 apartments were sold to condo converters during the condo-conversion boom periods of 2004 through 2006.

However, since then, 31,500 units have returned back to rentals. Many prospective home buyers continue to play the waiting game these times, waiting to see how low home prices will go, while others are simply finding it hard to get a mortgage after the tremors in the subprime market. All these events have been favorable for landlords, but the effect on the rental market has only appeared lately.

According to analysts, many efforts have been concentrated on residential properties, which held back the stocks in 2007, and that many nervous investors seem to have avoided all companies in the housing market, even those involved in rentals; however things have changed now. These investors are now trying to find ways of how to profit from the residential market, and one way of accomplishing that is throwing their hat in the rental business.

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Shell Smith
shell - Manhattan, NY

I have read similar articles - and have probably posted almost the same comments.  But I really appreciate this post.  I love the topics you have raised. I think the weak dollar has a lot to do with foreign investors buying 2nd homes in FL.  I for one have been looking for a 2nd home using Property Maps (, which allows you to look in specific areas, and even search for foreclosures.  Thanks again for your great info.    

Jul 31, 2008 06:38 AM #1
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